Tata Communications (Tata) has launched a low-latency network connecting major financial capitals in Asia (Singapore, Hong Kong, and Tokyo), the UK, and the US.
While it is not the first such network, and does not claim to be the fastest in the market, the scale of the multipoint Ethernet services based on provider backbone bridging (PBB) technology offers an attractive proposition to meet the growing demand for low latency beyond the traditional applications in the financial services industry.
It will also enable Tata to offer a greater range of service level agreements (SLAs) for enterprise and wholesale customers, and ultimately increase the utilization of its core cable systems.
Low latency a rising requirement
Rising complexity, the increased importance of specific mission-critical applications, and lower prices due to greater competition mean that the requirement for fast Ethernet services based on low-latency networks is increasingly coming from enterprises outside of the financial services industry.
Tata claims that some IT organizations and pharmaceutical companies are already demanding low latency. It is unsurprising that financial trading customers are not monopolizing the interest in these new services given the current conditions in the sector, and the possibility of opening previously untapped markets is interesting.
For many companies, consistency matters more than the inherent value of the high-speed network. These companies are increasingly running software applications that require low latency. As a result, Tata’s SLAs for its low-latency network include near real time latency guarantees, with latency measured every five minutes on a 24/7 basis.
While companies with similar requirements to those in the financial services industry, such as online gambling businesses, are expected to demand low-latency networks, we believe that other B2C and B2B applications that are not related to financial transactions are also potential customers for these services. This is particularly the case for companies providing real time services based on high volumes of data on a global (or regional) scale, such as over-the-top (OTT) players offering online gaming and cloud services, especially with video applications.
Multipoint services improve SLAs
The multipoint-to-multipoint Ethernet services proposition will add flexibility and improve Tata’s ability to offer a greater range of SLAs for enterprise and wholesale customers. This will provide customers with better cost control, more flexibility to define SLAs (e.g. packet loss) across the entire network, and greater ability to share bandwidth and achieve higher utilization across their networks.
In addition, enterprises that have multiple networks to address diverse requirements (e.g. low latency between two major sites, but a more cost-effective standard latency solution for sites with less critical back-office applications) will be able to combine them in a single network through Tata’s “one stop shop”.
This will increase Tata’s addressable market and ultimately improve the utilization of its core cable systems. This aligns with its global expansion strategy, which typically starts with the company landing a cable network and then building a broader infrastructure and services portfolio from the core.
Claudio Castelli is a senior analyst for enterprise telecoms at Ovum. For more information, visit www.ovum.com/